ETX Systems sizes up better yield for bitumen upgrading

A novel technology approaches commercialization

January 23, 2012

Illustration by Paul Blow

On a daily basis, about 1.5 million barrels of oil are extracted from the tracts of land surrounding Fort McMurray – and only about half of it is upgraded inside the province. The rest of it is exported to refineries, primarily in the U.S., where it’s upgraded to a more valuable blend of oil and other petroleum products ready for resale. The Alberta Department of Energy predicts the volume of crude oil production in the province could more than double to 3.2 million barrels per day.

“We may have considerably underestimated the value of upgrading and the value it is to our oil sands; and that may play out in the next couple of years,” says Gerard Monaghan, CEO of ETX Systems Inc.

The Calgary-based company is hoping to cash in on that opportunity. After more than 10 years and millions of dollars in investment capital, ETX Systems is in the final stages of readying its IYQ Upgrading for commercialization. The process aims to increase both the yield and quality (hence, IYQ) of current upgrading techniques, while remaining economically viable. “Those are essentially the three pillars to all upgrading processes,” says Wayne Brown, CTO of ETX. “It’s not good enough to be better in two of them and not in the third. You have to be a lot better in one and just as good, if not better, in the other two.”

Monaghan and Brown both have a long history in the oil sands. The pair of engineers met while working at Syncrude’s Mildred Lake mine in the early 1990s. Brown left to pursue a PhD in chemical engineering at McGill University, before returning to the company to work for a year out of its Edmonton research center. He returned to McGill as an assistant professor in 1999, as well as working as a consultant. “My whole life has been about solving problems with a definite focus in oil sands and heavy oil,” Brown says.

Monaghan started his decade of employment with Syncrude Canada in 1989. His time was primarily filled working on fluid coking units, doing pilot work and process development. “Both Wayne and I were in the development stage and were asked to apply our knowledge in applications that Syncrude was already invested in,” Monaghan says. Then the pair started to play the “what if” game. “If we began with a blank piece of paper, knowing what we know, could we make a better upgrading system?”

The ideas started to flow and it was enough to secure some angel investor funding to launch Envision Technologies Corp. in 1999. Monaghan admits, however, they weren’t starting with an entirely blank page. A number of researchers, particularly in Alberta, had already performed extensive studies in the areas of coking and upgrading. This ground work was essential for Monaghan and Brown as they looked to develop improved yield and quality in upgrading. The technology that eventually formed the base for the IYQ Upgrading system – a reactor with cross-flow fluidization – was no exception.

“A lower temperature is the key to a higher yield, but when you slow down the process you need bigger equipment and then it doesn’t become very economical,” Brown explains. “We recognized that we had to run at a lower temperature, but keep capital costs down and our reactor design from the get-go is much smaller.”

A plug-flow reactor takes center stage in IYQ Upgrading. Essentially, the reactor allows an operator to adjust the temperature of the gas and liquid phases separately. This allows the liquids to be removed from high temperatures once they crack.

“Once you produce products, if they stay in that environment of 500 degrees Celsius, they’ll continue to crack and degrade yield and quality,” Brown says. “Because the gas and liquid move in a different direction, you can tune those independently and as soon as product is generated, it’s off the reactor.” As ETX continues to develop its upgrading system, plug-flow reactors are used commercially to dry solid material, such as wet sand, Brown says. “Both are known technologies, we just put them together,” he says. “There’s no new technology to brag about or to scare people with.”

The trick is to adapt it for heavy oil. With a theory Monaghan and Brown were comfortable moving forward with, the pair looked for private investors and after securing additional funding, Envision Technologies became ETX Systems in 2006. “Having a concept isn’t enough. Many ideas seem great on paper, but then there’s a smoking gun that makes it not viable,” Brown says. “We don’t want to flog a dead horse. If we missed something, we need to know ASAP.”

Using this guiding philosophy, the company has had third party testing and independent reviews performed on all its work. ETX Systems has also filed a number of patents along the way in an effort to be open about its developments. All the research and study results has helped ETX make inroads. “Some of our early challenges were people asking what was the justification for the yield and quality claims,” Brown says. “They’d say, ‘we want to see a one barrel per day pilot.’ So that’s what we did.”

The pilot was recently decommissioned after 196 runs, which Brown says substantiated the company’s claims of about a 10 per cent yield increase on a barrel of oil. The next step for ETX Systems is a 1,000 barrel per day pilot. The $60 million project is expected to be ready in 2013 and after operating for 12-14 months of 24-hour days, ETX says its IYQ Upgrading will be ready for commercialization in 2014. “We can make the economics work at 20,000 barrels per day,” Monaghan says.

Note: An earlier version of this story said crude oil production in Alberta could double to 3.2 million barrels per day by 2010. Alberta Oil regrets the error.